China's industry has been surprising, even in the face of internal structural challenges such as the economic slowdown and an aging population. In addition, the external sector also imposes limits on international trade due to the contractionary monetary policies implemented by the world's main economies. Even so, industrial production grew by 7% in January and February compared to the same period last year, above Reuters' projections for a 5% increase. In March, the manufacturing PMI, an important indicator for the sector, reached 50.8, signaling expansion for the first time since September last year.
However, other data draws attention. While the deflation of producer prices (PPI) has helped to make the country's products more competitive internationally, this explains why exports are falling when measured in dollars, but expanding in volume. On the other hand, this result has been achieved by the idleness of the country's industrial complex and lower domestic demand, a major challenge for the Chinese authorities.
Real estate development has been one of the main drivers of the Chinese economy in recent decades. Despite the current crisis, the sector will be crucial in determining whether China reaches its growth target of around 5% by 2024. However, its relevance is now associated with the pace of its slowdown, rather than its contribution to GDP growth.
The first few months of 2024 continue to show downward trends for the Chinese real estate sector, with residential property sales down by more than 25% and investments falling. In 2013, the real estate sector accounted for 12% of the country's GDP, while this year projections indicate a figure of just over 5%. However, recent data has revealed challenges in both areas, with exports in dollars falling and domestic consumption moderating.
In view of this, pressure is growing on Beijing to implement more stimulus, whether fiscal or monetary, in order to boost the country's economy.
